Leaked files from a Panamanian law firm showed that Gunnlaugsson's wife, Anna Sigurlaug Palsdottir, owns a company in the British Virgin Islands that has more than $4 million in claims against Iceland's collapsed banks.

Iceland's prime minister says he has not resigned, as previously reported, but has merely "suggested" that the vice chairman of his party take over the office "for an unspecified amount of time."

The announcement came in a news release from the prime minister's office late Tuesday. The release continued to say that Sigmundur David Gunnlaugsson "will continue to serve as chairman of the Progressive Party."

Earlier Tuesday, reports said Gunnlaugsson had resigned as prime minister, the first casualty of the Panama Papers disclosures about the hidden offshore investments of the wealthy, powerful and famous around the world.

Leaked files from a Panamanian law firm showed that Gunnlaugsson's wife, Anna Sigurlaug Palsdottir, owns a company in the British Virgin Islands that has more than $4 million in claims against Iceland's collapsed banks.

Gunnlaugsson said his wife's overseas assets were taxed in Iceland, but his opponents said he should have disclosed his wife's ownership of the company since the government is involved in settling claims against the bankrupt financial institutions.

People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company.

He stepped aside ahead of a planned no-confidence vote in parliament, with the ruling Progressive Party naming its deputy leader, Sigurdur Ingi Johannsson, to take over as the country's new leader. Thousands of Icelanders protested in Reykjavik outside parliament Monday, hurling eggs and bananas and demanding Gunnlaugsson's ouster.

Gunnlaugsson and his wife set up the company with the help of the Mossack Fonseca, the law firm at the center of the massive leak of 11.5 million documents from its files.

Panama Papers

The Washington-based International Consortium of Investigative Journalists on Sunday detailed the creation of offshore companies for 140 politicians and public officials, wealthy individuals and other prominent figures from across the world, raising questions about why they set up the companies and whether they have dodged taxes on their profits.

Governments across the world said they are examining the documents to check on the tax liability of the individuals named in them, while some people whose names were disclosed have denied any wrongdoing and denounced the reports as unfounded attacks.

World leaders

In addition to Iceland's prime minister, the journalists' group said the documents showed dozens of transactions totaling nearly $2 billion involving people or companies linked to Russian President Vladimir Putin.

Other high profile individuals named included the prime ministers of Pakistan, the presidents of Ukraine and Argentina, and the king of Saudi Arabia.

The journalists also said the documents revealed that at least 33 people and companies blacklisted by the U.S. government because of evidence that they had been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran, have had dealings with Mossack Fonseca.

The group also claimed the documents showed that major banks are behind the creation of the hard-to-trace companies in the offshore tax havens. More than 500 banks, their subsidiaries and branches have created more than 15,000 offshore companies for their customers through Mossack Fonseca from 1977 to late last year.

The full extent and implications from the leaked records are not yet clear, and more stories about them are expected in the coming days.